Question

Type your answer in the box. On April 8, Party Time received merchandise costing $1,500 with freight charges of $100 paid by the supplier and added to the invoice, terms 2/10, n/30. Some goods were returned, and, on April 11, the supplier issued a credit memo in the amount of $400. On April 17, Party Time wrote a check for the amount due of $ (Do not input a comma or cents.)

Answer 1

Cost of goods purchased = $1,500

Freight in = $100

Invoice price = Cost of goods purchased + Freight in

= 1,500+100

= $1,600

Cost of goods returned = $400

Final amount due = Invoice price - Cost of goods returned

= 1,600-400

= $1,200

Purchase terms are 2/10, n/30, which means 2% discount will be allowed if payment is made within 10 days of purchase. Goods were purchased on April 8 and final payment was made on April 17 ( With in 10 days), hence 2% discount will be allowed.

Discount amount = final amount due x Discount percentage

= 1,200 x 2%

= $24

Cash to be paid = Final amount due - Discount amount

= 1,200-24

= $1,176

Hence, on April 17, party time wrote a check for $1,176.

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